But will we see higher food costs on the horizon? Perhaps, though increases may not be as steep as in previous months.

The bottom line: Inflation is hardly a threat to most consumers, and there is also little wiggle room for interest-rate hikes down the road.

Canada’s annual rate of price increases rose by 1.3% in July, the highest level in a year and up from the 1.2% gain the previous month, Statistics Canada said Friday.

Even so, last month’s reading fell below economists’ forecasts for a 1.4% annual increase during the month.

“If we’re being consistently surprised, it’s on the low not the high side for inflation this year,” said Douglas Porter, chief economist at BMO Capital Markets.

“Canada continues to have one of the lowest inflation rates in the industrialized world.”

Statistics Canada said transportation costs rose 2.7% in July from the same month last year, compared to a 2% gain in June. Gasoline prices were the biggest contributor to the bump in that sector, up 6.1% on an annual basis from an increase of 4.6% in June.

Shelter costs for rental and owned accommodations —which includes home utilities, insurance and maintenance — were up 1.3% from 1.2% in June. “Compared with July last year, natural gas prices and rent increased, while mortgage interest-costs declined 3.8%,” Statistics Canada said.

“We’ve seen a pull back in some raw commodities, but the numbers also point to heated competition from new entrants giving Canadians a break at the supermarket check-out.”

Meanwhile, core inflation — stripping out volatile items, including some food and energy products — rose by 1.4% in July from a year earlier, following a 1.3% increase the previous month and below analysts’ forecasts of a 1.5% rise.

Overall, inflation was up in nine provinces last month, with Manitoba seeing the largest increase, at 3%. On July 1, Manitoba raised its provincial sales tax to 8% from 7%, which would explain a large part of that jump.

British Columbia was the only province where consumer prices were unchanged after easing back 0.5% in June.

The Bank of Canada, in its recent quarterly Monetary Policy Report, said it expected inflation to remain below its 2% target that it uses to guide interest rate policy until around mid-2015.

The central bank has kept its trendsetting overnight lending rate at 1% since September 2010, and most economists do not anticipate any change until at least late 2014 — depending on signs of a sustainable recovery in the global economy.

BoC policymakers are forecasting growth of 1.8% this year, following a 1.7% advance in 2012. They expect an advance of 1% in the second quarter of 2013, although many economists believe a stronger showing is likely. Growth in June, the final month of the quarter, will be released next Friday.

“While the upward drift [in inflation] argues that the Bank of Canada’s next move will still likely be to raise rather than lower rates, the overall muted inflation backdrop provides little pressure to make a change in the near term,” said Nathan Janzen, at RBC Economics.